Government hikes rice allocation for ethanol to 5.2 million tonnes

In a major policy shift aimed at boosting ethanol production and reducing reliance on imported crude oil, the Ministry of Consumer Affairs, Food and Public Distribution has increased the allocation of rice for ethanol production to 5.2 million tonnes.

The decision comes in light of surplus stock held by the Food Corporation of India (FCI), which is currently sitting on approximately 60 million tonnes of rice and paddy—far exceeding the buffer stock norm of 13.5 million tonnes.

As per reports, the surplus rice stocks not only create storage bottlenecks but also limit FCI’s capacity to procure fresh harvests, as available space is already overstretched. Utilizing this excess rice for ethanol will ease the inventory burden and serve a national priority.

The important decision is expected to reduce the diversion of sugarcane for alcohol production. As a result, more sugarcane will be available for sugar manufacturing, thereby helping to keep sugar prices stable in the domestic market. Industry experts view this as a win-win for both energy security and food price management.

Additionally, grain-based ethanol producers—who have so far primarily used maize—will now have the option to switch to rice. This is likely to ease the demand pressure on maize, a key component of poultry feed, and could bring down feed costs for poultry farmers struggling with high input prices.

In a related development, Minister of Petroleum and Natural Gas Hardeep Singh Puri announced that E20 (20% ethanol-blended) petrol is now being supplied across all retail outlets operated by public sector oil companies, including Indian Oil, Bharat Petroleum, and Hindustan Petroleum.

Highlighting the country’s significant progress in its ethanol blending program, the minister said India achieved the 20% blending milestone in early 2025—six years ahead of the original 2030 target. “This has resulted in massive benefits: over ₹1 lakh crore saved and foreign exchange savings of ₹1.5 lakh crore by reducing crude imports. And more importantly, this money has gone directly to our farmers,” he added.

The initiative is a part of India’s broader push towards cleaner fuels, improved energy self-reliance, and enhanced farmer welfare.